PROJECT 8: Long-Term Changes in Saving Behavior Important strides have been made in our understanding household wealth accumulation. While new household surveys have been used almost exclusively to address cross-sectional issues, some of the more fundamental resolved questions about wealth accumulation relate to time series trends. What impact did increasing income inequality have on the level and distribution of household wealth? Why have savings rates for American households fallen so precipitously? Why, in spite of the sharp decline in household savings rates since the mid-1980s, did household wealth to household income levels increase? This research will document trends in the structure of household savings and wealth over the period from the 1960s to the first years of the next century. This work will address a basic anomaly of declining household savings rate alongside rising wealth levels, the changing structure of the composition of household wealth, and the role of demographic forces such as marriage and age structure in explaining these trends. In addition, we will contrast micro-savings functions estimated across four decades. An important issue is the degree to which household savings are a constant fraction of household permanent income, and whether any non-linearity flows from the distinction between "active" and "passive" savings. Active savings corresponds to the direct foregoing of consumption while passive savings refers to wealth accumulation that flows from capital gains. Due to substantial swings in stock prices in particular, capital gains has been an important component of wealth accumulation in recent decades. Available household surveys often yield inconsistent patterns about the trends in savings and wealth over time. If we cannot explain the reasons for these discrepancies, we will have little confidence in how robust our conclusions will be based on any of these surveys in isolation. Our final aim is to compute retirement income replacement rates for all years after 1950 and to describe the change relative contributions made by private pensions, social security and assets in providing income during retirement. These calculations will be extended into the future to determine whether or not there will be a retirement income crisis for the baby-boom-cohorts.